Kotmale expands in the dairy sector

by Irangika Range

Kotmale Holdings Limited (KHL), a leading diary products manufacturer in Sri Lanka has achieved many goals and won accolades in the local diary industry by recording a turnover of Rs.126 million for the three months ended March 31, 2005 with a GP margin of 25 per cent.

The net profit for the period was Rs.6 million, which can be considered as a remarkable growth. Establishing the Swiss Cheese Company to manufacture cheese 27 years ago by collecting fresh cattle milk through its own centers, today it has climbed up the ladder to the top.

Today, the company is one of the leading suppliers of cheese to the market with its range of swiss, mozzarella and ball cheese sustaining, a 80 percent market share.

Consequent to the demand for Kotmale products in the market, the company diversified its operations by entering the fast growing ready to drink segment under the brand name of Kotmale.

General Manager of KHL, Trevine Gomez said with the high demand for cheese, in 2002 Swiss Cheese Company ventured into the tetra milk segment with the introduction of a tetra pack in the form of a pouch.

This was to compliment the existing pasteurised milk sachet the company had and also to make use of the milk packet concept of the country. Expanding its diary products operation further, it started to manufacture yoghurt too.

The company entered the ice cream market in 1994 with the acquisition of business of the Dasaprakash Icecreams in Mulleriyawa.

This has helped to expand their business in an efficient manner. Today, the company's product portfolio consists mainly of diary products while core products are cheese, ice cream, yoghurt, and flavoured milk which are manufactured by collecting fresh cows milk from 7 major regional centers islandwide.

Gomez said currently that the company collects fresh milk of about 25,000 to 30,000 liters per day. 'We are very keen on supporting farmers to raise quality cows and we provide them technical support, medication and food to prevent cows from malnourishment and disease.

In order to collect fresh milk in ensuring quality, the company provides farmers, tanks which includes a chilling unit to store milk.

We have set up a laboratory in each collecting center to check real fat, solid and PH value of milk. According these measurements we understand the quality of the milk and issue the payments to farmers," he said. The company has 24 hour running browsers, which are insulated to protect the milk condition during the transportation. When browsers arrived in Colombo, we again check the quality at the quality assurance laboratory which helps to ensure superiority of the product.

The KHL follows national and internationally accepted standards to maintain its quality. He said that the major problem of the diary industry is getting less fresh milk from the limited number of local cattle and its quality is also not sufficient to compete with other countries. They have started their own farm in Kandy which 120 cows with pedigree and imported from India.

Since the company was stated as a home based cheese manufacturer, Kotmale products have a high demand in the market. Flavoured pasteurised milk is a big seller in the market. Flavoured milk is the market leader having a 50 percent market share.

UHT flavoured and white milk has also shown a 40 percent of growth in the last year sustaining second place at the market.

Kotmale ice cream occupies the third position in the local ice cream sector whilst Kotmale yoghurt occupies the fourth slot in its category.

Apart from that, the company's other products include fresh cream, ghee. The non-diary range includes treacle and fruit drinks.

KHL will also set up new machinery by investing Rs. 30 million this November to increase the productivity.

Although there is big demand for the recently launched Kotmale powdered milk, they always encourage customers to consume fresh milk, a more nutritious and wholesome drink. Today, 80 percent of Sri Lankans consume powdered milk and the company expects to promote it while continually developing its fresh milk products at the market. KHL has set up a packaging plant in Kalutara with a 25,000 packet output per day.

In order to achieve the target to become a market leader in the local diary industry, the company will set up its own farms and more fresh milk centers islandwide.

It has also planned to import high quality cattle from USA. The company is targeting a turnover of Rs.550 million by end of this year while aiming to top Rs. one billion with the powdered milk segment next year.